BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 2018
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          Date of Hearing:   August 20, 2014

              ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER  
                                     PROTECTION
                               Susan A. Bonilla, Chair
                  AB 2018 (Bocanegra) - As Amended:  August 12, 2014
           
          SUBJECT  :   Real estate licensees: fictitious business names. 

           SUMMARY  :   Revises the requirements for the use of "fictitious  
          business names" by real estate licensees, and authorizes the use  
          of "team names" subject to specified requirements.    
          Specifically,  this bill  :  



          1)Authorizes a responsible broker to permit, by contract, a  
            salesperson to:



             a)   File an application with a county clerk on behalf of the  
               broker to obtain a fictitious business name;





             b)   Deliver to the California Bureau of Real Estate (BRE) an  
               application, signed by the responsible broker, requesting  
               BRE's approval to use a county-approved fictitious business  
               name that shall be identified with the broker's license  
               number;





             c)   Pay any related application fees to a county or BRE; and





             d)   Maintain ownership of a fictitious business name that  








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               may be used subject to the control of a responsible broker.
           
          1)Requires a salesperson using a fictitious business name to use  
            that name only as permitted by his or her responsible broker.

          2)Clarifies that nothing in this bill changes a real estate  
            broker's duty to supervise a salesperson.

          3)Authorizes a person applying to a county for a fictitious  
            business name to file his or her application in the county or  
            counties where the fictitious business name will be used.

          4)Requires marketing and solicitation materials, including  
            business cards, print or electronic media and "for sale"  
            signage, using a fictitious business name to include the  
            responsible broker's identity in a manner equally as prominent  
            as the fictitious business name.
               
          5)Requires advertising, including print or electronic media and  
            "for sale" signage, containing a fictitious business name to  
            include the salesperson's name and license number. 

          6)Declares that a violation of these provisions is not a  
            misdemeanor.

          7)Regarding the use of a "team name", as defined, provide that  
            all of the following shall apply:

             a)   Advertising that contains a team name, including print  
               or electronic media and "for sale" signage, shall include  
               the licensee's name and license number in all advertising  
               and be displayed in a conspicuous manner;

             b)   The responsible broker's identity shall be displayed as  
               prominently and conspicuously as the team name in all  
               advertising; 

             c)   The advertising material shall not contain terms that  
               imply the existence of a real estate entity independent of  
               the responsible broker; and

             d)   A violation of these provisions is not a misdemeanor,  
               and shall be enforced as specified.

          8)Defines "broker identity" to mean "the name under which the  








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            broker operates or conducts business and may include a sole  
            proprietorship or business entity name."

          9)Defines "fictitious business name" to mean "a professional  
            identity or brand name under which activity requiring a real  
            estate license is conducted and the use of which is subject to  
            approval by the bureau pursuant to Section 10159.5."

          10)Defines "team name" to mean "a professional identity or brand  
            name used by a salesperson, and one or more other real estate  
            licensees, for the provision of real estate licensed services.  
            Notwithstanding any other law, the use of a team name does not  
            require that a separate license be issued for that name  
            pursuant to Section 10159.5. A team name does not constitute a  
            fictitious business name for purposes of this part if all of  
            the following apply:

             a)   The name is used by two or more real estate licensees  
               who work together to provide licensed real estate services,  
               or who represent themselves to the public as being a part  
               of a team, group, or association to provide those services.

             b)   The name includes the surname of at least one of the  
               licensee members of the team, group, or association in  
               conjunction with the term 'associates,' 'group,' or 'team.'

             c)   The name does not include any term or terms, such as  
               "real estate broker," "real estate brokerage," "broker," or  
               "brokerage" or any other term that would lead a member of  
               the public to believe that the team is offering real estate  
               brokerage services, that imply or suggest the existence of  
               a real estate entity independent of a responsible broker."

          11)Defines the terms "ownership of a fictitious business name"  
            and "responsible broker." 

          12)Makes other technical or clarifying changes. 

           EXISTING LAW:  

          1)Establishes the CalBRE, which is headed by the Real Estate  
            Commissioner, which issues licenses to and regulates real  
            estate brokers and real estate salespersons under the Real  
            Estate Law.  (Business and Professions Code (BPC) Section  
            10150 et seq.)








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          2)Requires an applicant who desires to have his or her license  
            issued under a fictitious business name to file with his or  
            her application a certified copy of his or her fictitious  
            business name statement. (BPC 10159.5)

          3)Provides that "solicitation materials intended to be the first  
            point of contact with consumers," includes business cards,  
            stationery, advertising fliers, and other materials designed  
            to solicit the creation of a professional relationship between  
            the licensee and a consumer, and excludes an advertisement in  
            print or electronic media and "for sale" signs. (BPC 10140.6)

          FISCAL EFFECT  :   According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.

           COMMENTS  :   

           1)Purpose of the bill  .  This bill is intended to facilitate the  
            use of "team names" advertised in a real estate context while  
            specifying when a team name is not formally a "fictitious  
            business name" with all the additional requirements that would  
            normally apply.  By clarifying the distinction between a team  
            name and a fictitious business name, the author aims to make  
            it easier for real estate brokers to use team names and  
            thereby avoid the full regulatory burden of obtaining a  
            fictitious business name.  This bill is author sponsored.

           2)Author's statement  .  According to the author, "Real estate  
            licensees are NOT permitted to make any misleading or false  
            representations within their advertisements or marketing  
            materials.  Because salespersons activities are supervised by  
            an employing broker, they are not permitted to hold themselves  
            out as an unsupervised licensee or independent real estate  
            firm.  In recent years, salespersons (real estate licensees)  
            attempting to create their own brand identity, for marketing  
            purposes, has led to an increased use in 'team' marketing  
            approaches within Brokerages.  Throughout California 'team'  
            names (i.e. 'The Smith Team') are often included on for sale  
            signs, billboards, business cards, promotional flyers, emails,  
            and brochures."

            "Filing for a fictitious business names is a very detailed  
            [and] cumbersome process. Additionally, the rules regarding  
            fictitious business names differ depending on the structure of  








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            the business.  Current law only permits an employing Broker to  
            own a fictitious business name, which may be used by their  
            salespersons.  Those licensees wishing to use a fictitious  
            business name must first register the name with the County  
            that hosts their broker's main office and then submit the  
            approved name to CalBRE for their review."

           3)Fictitious business names  .  A fictitious business name is any  
            name under which an individual transacts business in this  
            state, other than his or her legal name.  The use of a  
            fictitious business name requires filing a fictitious business  
            statement 'doing business as' (DBA) with the county clerk's  
            office where the business is located.     

            The fictitious business statement is intended to provide the  
            public with a means to learn the identities of individuals  
            doing business under the fictitious name in case a consumer  
            needs to contact the owners of a business to seek help with a  
            problem, or to report owners or licensees to the authorities.  
            This bill is intended to loosen the requirements for when an  
            advertised business name is 'fictitious' and thereby reduce  
            the filing requirements, on the theory that the criteria  
            provided by this bill (first and last names, license numbers,  
            names of employing broker, etc.) should give consumers enough  
            information to identify responsible individuals if there is a  
            problem or complaint.  

           4)Arguments in support  .  According to the California Association  
            of Realtors, "This bill makes an important clarification in  
            the real estate law. The amendments taken in the Senate were  
            necessary to create clarity in the regulation of fictitious  
            business names while also setting out clear and understandable  
            advertising standards for [fictitious] business names and  
            'team' names? The lack of clear regulation creates confusion  
            throughout the real estate industry on what is and what is not  
            a fictitious business name. AB 2018 will resolve this  
            ambiguity by statutorily defining how a salesperson, with  
            their broker's permission, can use a fictitious business name,  
            while also establishing clear standards for the use [of]  
            'team' names that are not fictitious business names."

           5)Substantial amendments  .  This bill was substantially amended  
            in the Senate and the Assembly-approved version of this bill  
            was largely deleted, although the topic remained the same.   
            The current provisions of this bill, as amended in the Senate,  








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            have not been heard in an Assembly policy committee. 

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Association of Relators

           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Hank Dempsey / B.,P. & C.P. / (916)  
          319-3301